The Cabinet Committee on Privatization (CCOP) in its
meeting last week in Islamabad finalised a calendar for privatization of
seven important state enterprises up to April 2003. The CCOP meeting
presided over by the Finance Minister left the actual implementation of
the programme by the incoming elected government likely to be
functioning by the end of this month.
The seven units identified included units of large
capital base like Pakistan State Oil, Habib Bank Ltd., Pakistan
Telecommunication Company, Oil & Gas Development Company, Karachi
Electric Supply Corporation, National Investment Trust and Pak Arab
Fertilizer. The prepatory work for the privatization of these big
enterprises has been completed and these transactions are now ready for
bidding. PSO, NITL, and HBL were at advanced stages and their bidding
earlier scheduled for 3rd week of November has been advanced by 2 weeks.
Earlier, the board of privatization commission was
informed by the privatization minister, Altaf Saleem, that out of total
of Rs.36.2 billion earned during the period from October 1999 to October
2002, through privatisation proceeds an amount of Rs.9 billion had been
transferred to the government and $125 million was available for
transfer to the government. In addition, an amount of Rs.14 billion had
been transferred to State Bank of Pakistan and over Rs.3 billion to
other entities entitled to the proceeds under the law.
The board was told that the sale of shares of
Pakistan Oilfields Ltd. through stock exchanges had fetched Rs.220
million and remaining 24.1 million shares of MCB had been sold through
the same process for Rs.640 million.
The CCOP was informed that the privatisation
programme was moving ahead with full tempo after processing 82
transactions to market in the last 3 years resulting in achieving
proceeds of Rs.36.2 billion. This programme needed to be taken forward
with full commitment so that major transactions could successfully be
concluded in the period between November 2002 and April 2003 likely to
fetch Rs.100 billion, the committee was told.
The CCOP appreciated the strenuous preparatory work
that Privatization Commission had to undertake before an entity or a
business concern can be offered for sale to the prospective investors.
The process starts with the identification of the entity to be
privatized. A Financial Advisor (FA) is then selected and appointed to
submit the technical and financial proposals for making the entity
saleable and propose a transaction structure for approval. FA's job
includes removal of legal encumbrances and restructuring of the entity.
The Financial Advisor for this purpose carries out due diligence in
depth before submitting recommendations.
Enactment of a regulatory framework and sectoral
reforms was done to ensure level playing field and competitive framework
in the post privatization period are carried out. The next important
step is valuation of property/ assets, which serves as the benchmark, or
indication of the fair value. Interested parties are then called to
pre-bid meetings where the issues they raise are clarified. Bidding is
the last stage after which a legal contract is entered into with the
successful bidder regarding payments, handing over of the assets.
The CCOP noted that the pipeline of privatization was
almost empty when this government took over. The Minister for
Privatization Altaf Saleem and his team had done commendable job in
bringing all these important transactions to maturity going through all
steps indicated above in a short period.
The CCOP approved the package for recovery of balance
sale price for certain privatized enterprises. The Committee also
approved sale of shares of Kohat Cement and DG Khan Cement companies
through Stock Markets. CCOP gave go ahead for the privatization of ICP
and its mutual funds.
After remaining stugglish for over a year of
following the take over by Gen. Musharraf, the PC picked up its work in
right earnest last years. It has gained a momentum, but September 11
event in the USA and consequent Afghan war again allowed down the
process for many months. After absorbing this setback, the PC started
its work with full speed and successfully carried out many transactions
including that of United Bank Ltd. (UBL) during the last few months.
Addressing a meeting of Chamber of Commerce and
Industry, the Minister of State for Privatization, Altaf M. Saleem said
that state enterprises worth over Rs.100 billion are ready for
privatization and the same are likely to be put into market in the
period from November 2002 to March 2003. He said that during the tenure
of present regime, state enterprises worth Rs.36.2 billion have been
privatized. Out of this 50 per cent sale proceed came from domestic
investors, while rest of them came from foreigners, including overseas
Pakistanis. He said that the previous regime could make only two
transactions during its tenure and that were worth Rs.2.45 billion.
Nevertheless, present regime, when came into power refocused the
programme and done preparatory work before any transactions, which was
not in practice in the past. That was why there were about 8.35
litigation cases against the privatization of different entities done
during past many regimes. But there was not even single litigation case
against the sales conducted by present regime, he proudly claimed.
Before privatization of certain entities, all the stakeholders were
taken into confidence and they were convinced that there was no problem
in privatizing the entities. Privatization ordinance was promulgated
that also provided a clear-cut road map and put proper regulatory
framework in place, he claimed.